All Forum Posts by: Jay Hinrichs

Quote from @Jeff Langley:

Is 3 hours enough to get you across the state line….

 from Sac  yes 80 or 50 to Nevada

Quote from @Andrew Syrios:

Quote from @Jay Hinrichs:

Quote from @Andrew Syrios:

I have never seen a bank call a Due on Sales Clause on a performing loan. I've heard of it but never seen it happen. Has anyone actually had a bank do this on a property they bought subject to? 

yes twice in the PDX market.. And how it went down Andrew was we got a letter . forwarded to us by the people we bought it from, It was a demand letter IE bank is aware the property changed hands per your Alienation clause the bank will call this note if its not paid in full by this date.. These were both smaller local banks One in Banks Oregon by coincidence and one in PDX.. So we just paid them off in cash. The rub comes if this happens to an investor who is highly leveraged does not have 250k to pay off a mortgage in cash and cant get a loan in time or at all ( as the reason they bought sub to is they cant get loans) Now you have a NOD being filed against the people you bought it from and their credit is trashed.. You can expect a lawyer letter and maybe the seller turns you into the AG etc etc.. Have seen that happen..

You and your family would have no issues with this method (Sub To) as you have the wherewithal to cure at a moments notice. Its the beginner or the dreamer who little to no real money that is going to have some major issues. Or the investor who does not want to lose their down stroke because they cant refi or pay it off or get it sold for enough to cure.. Many of the deals are at max LTV leaving very little room to maneuver..

Our play in the day was foreclosures and ONLY buying these that had at least 30% Equity above what we were in it day one.  And we just used the sub to as a short term option while we stabilized and resold for profit  Or hopefully for profit :) We were not doing these to create a rental portfolio.. Like what it appears is happening now.. And to make matters even worse those that would then resell these on terms or LOs to other non credit worthy buyers and this can lead to huge problems.. I bailed out a group in PDX that did this about 30 times.. And once the lease option tenant stopped paying it created a downward spiral as you have to eject a lease with option to buy client with a full blown foreclosure in Oregon.. This group drank the coolaid from whatever guru was selling this system back in 2002.. I grabbed about 10 of them that had equity the rest of them went into the toilet.. this company got sued and turned into the AG and really goofed them up.. They simply did not know what they did not know and were naive enough to think that all tenants pay :)

Was this relatively recently? I figured banks would start doing this with sub-2s that have a rate in the 2s and 3s when rates right now are in the mid 6s.

 2006 ish 

I would be up for a conversation on High end flips and what you guys are doing to keep relevant. 

Quote from @John Underwood:

Good markets are subjective and depend on a lot of things like the specific location of the property.

You can Google this and find many articles that say why certain areas are good.

I just saw SC is a top area with Charleston, Myrtle Beach and Greenville leading the way.

within 3 hours of Sac your head is going to spin.. thats everything from the Montery penninsula SF bay area Coast north of SF. Napa Sonoma Lake co wine country.. the gold country.. lake Tahoe North of Tahoe Greagle Plumas county south to Sonora and those areas.. I mean there are thousands of properties within 3 hours of sac that would work for STR if the regulations allow them.

U need to narrow it down by what you can afford.. I mean tahoe can be 5 to 50 million.. etc etc.. 

if we are talking something lets say 500k and under ( starter pricing) 
Graeagle  white hawk..  Grass Valley Nevada city..  Clear lake  can maybe sneak an older lake front in for 500 to 600k.. Tahoe probably priced out same with Truckee.. Monterey no  Bay area no  north of the Russian river maybe.. Lake Almanor will have a few in that price range. but for me its greagle all the way for 300 to 500k.. 

PS any of the cities that are at the gateway to America's most beautiful park  Yosemite. 

Quote from @Nicholas L.:

@Mike Dymski

agree with you and I think different people in different places are focusing on different aspects.

anyone have any predictions about what happens if this continues?

i think population growth may slow more quickly than was anticipated a few years ago.  could that ease demand side?

@Jay Hinrichs

@Marcus Auerbach

to me demand for high quality schools and jobs will determine the trajectory of the market I dont see anything happening or much of anything with the C D product. as stated those values will just follow what an investor is willing to pay for a certain rental return. 

Quote from @Andrew Syrios:

I have never seen a bank call a Due on Sales Clause on a performing loan. I've heard of it but never seen it happen. Has anyone actually had a bank do this on a property they bought subject to? 

yes twice in the PDX market.. And how it went down Andrew was we got a letter . forwarded to us by the people we bought it from, It was a demand letter IE bank is aware the property changed hands per your Alienation clause the bank will call this note if its not paid in full by this date.. These were both smaller local banks One in Banks Oregon by coincidence and one in PDX.. So we just paid them off in cash. The rub comes if this happens to an investor who is highly leveraged does not have 250k to pay off a mortgage in cash and cant get a loan in time or at all ( as the reason they bought sub to is they cant get loans) Now you have a NOD being filed against the people you bought it from and their credit is trashed.. You can expect a lawyer letter and maybe the seller turns you into the AG etc etc.. Have seen that happen..

You and your family would have no issues with this method (Sub To) as you have the wherewithal to cure at a moments notice. Its the beginner or the dreamer who little to no real money that is going to have some major issues. Or the investor who does not want to lose their down stroke because they cant refi or pay it off or get it sold for enough to cure.. Many of the deals are at max LTV leaving very little room to maneuver..

Our play in the day was foreclosures and ONLY buying these that had at least 30% Equity above what we were in it day one.  And we just used the sub to as a short term option while we stabilized and resold for profit  Or hopefully for profit :) We were not doing these to create a rental portfolio.. Like what it appears is happening now.. And to make matters even worse those that would then resell these on terms or LOs to other non credit worthy buyers and this can lead to huge problems.. I bailed out a group in PDX that did this about 30 times.. And once the lease option tenant stopped paying it created a downward spiral as you have to eject a lease with option to buy client with a full blown foreclosure in Oregon.. This group drank the coolaid from whatever guru was selling this system back in 2002.. I grabbed about 10 of them that had equity the rest of them went into the toilet.. this company got sued and turned into the AG and really goofed them up.. They simply did not know what they did not know and were naive enough to think that all tenants pay :)

Quote from @Don Konipol:

Quote from @Jay Hinrichs:

Quote from @Don Konipol:

Another bag of popcorn, please 

Don, you noted I did not take the popcorn bait.. Ken and I have been round and round on this over the years.  I know sub to is legal, However I know it can be quite dangerous for sellers. And buyers well they generally never have a clue or are woefully under capitalized to do this safely.  ..

I am not an expert on case law on LWO to purchase although I have done some myself.. And from my point of view the lease is separate from the option.. so you have a tenant that has all the protections of landlord tenant law.. And in a separate contract you have an option to purchase which can have non refundable option money. That is about the extent of my knowledge on that subject.. I do recall there was some massive abuses of LWO in Texas to non English speakers so Texas came up with some pretty stiff regulations relating to those transactions.

You're absolutely right about Texas - both lease with option to purchase and CFD have been just about eliminated for SFR in Texas. All real estate attorneys I know in Texas won't even partake in a commercial CFD.

Ken says he is in Austin.. so I am sure he knows this and does not recommend those for that state..  I assume though you can do straight owner carry just need to use a DT and a note and close escrow and transfer title. 

Quote from @Don Konipol:

Another bag of popcorn, please 

Don, you noted I did not take the popcorn bait.. Ken and I have been round and round on this over the years.  I know sub to is legal, However I know it can be quite dangerous for sellers. And buyers well they generally never have a clue or are woefully under capitalized to do this safely.  ..

I am not an expert on case law on LWO to purchase although I have done some myself.. And from my point of view the lease is separate from the option.. so you have a tenant that has all the protections of landlord tenant law.. And in a separate contract you have an option to purchase which can have non refundable option money. That is about the extent of my knowledge on that subject.. I do recall there was some massive abuses of LWO in Texas to non English speakers so Texas came up with some pretty stiff regulations relating to those transactions.

Quote from @Mike Grudzien:

I'm just on hiatus until interest rates change.

In all seriousness.. HML PML are not affected like  conventional owner occ loans.
rates stay about the same year in year out Rates from what I see tend to be regional with West coast being the most competitive on rates and .  but generally speaking rates have been 2 points and between 10 and 14% for years now .  If people use a broker sometimes fees go up to add in broker fees.. And of course there is generally junk fee's that are added literally the day of closing and that pisses off folks something fierce.. 

But for now and into the future and based on my lending PM and HM last 30 some years rates stay very consistent.

Quote from @Mike Grudzien:

I'm just on hiatus until interest rates change.

talk to you in 2028 :)